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Gurushantappa Sangappa Hoskeri Vs. Gurava Madivallappa - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 404 of 1924
Judge
Reported in(1926)28BOMLR603; 95Ind.Cas.696
AppellantGurushantappa Sangappa Hoskeri
RespondentGurava Madivallappa
DispositionAppeal dismissed
Excerpt:
.....property as well as any other property of the..........that the adjustment has not been proved, and the finding that mr. kambli, the pleader for the decree-holder, who was appointed one of the panch for the adjustment of the decree, could not be compelled to give evidence without the permission of and against the will of his client, we think it clear on the evidence of the surety himself that there was no adjustment of the claim of the judgment-creditor, so that it does not really make very much difference whether mr. kambli was allowed to give evidence or not, but it would appear that the decision on that point of the subordinate judge was right.3. the appellant then contended that the property in question cannot be sold otherwise than by instituting a suit for sale in enforcement of the mortgage under order xxxiv, rule 14, civil.....
Judgment:

Narman Macleod, Kt., C.J.

1. It appears that, in a certain insolvency matter, a composition was effected between the insolvent and his creditors, which was embodied in an order passed by the Court, Exhibit 38, on June 12, 1920. The debtor agreed to pay a certain proportion of his debts by instalments amounting to Rs. 10,000 on due dates with interest agreeably to the terms mentioned in the proposal. One Gurushantappa Hoskeri, on April 15, 1920, agreed by Exhibit 61 to personally pay the said Rs. 10,000 with interest as per terms contained in the proposal, and by the terms of the bond he also mortgaged the property mentioned therein as security for his liability. The debtor defaulted and the creditor sought to execute against the surety's property, under Section 145 of the Civil Procedure Code, and, on June 24, 1924, an order was made that a warrant of attachment should issue against the immoveable property of the surety as described in the surety bond for the recovery of the amount due. On August 28,1924, the sale of the property was ordered. Next day the surety presented an application, Exhibit 74, under Order XXI, Rule 2 (2) and notice was issued to the creditor. After hearing the parties, the Judge held that the adjustment set up in Exhibit 74 was found not proved, and the surety then asked for postponement of the sale under Order XXI, Rule 83, to enable him to raise the amount of the decree by private sale or mortgage or lease and asked for a certificate. The Judge declined to accede to the application, as the creditor objected to any delay, and, on October 14, 1924, directed that execution should proceed.

2. The surety has appealed against that order on various grounds. He objects to the finding of the Court that the adjustment has not been proved, and the finding that Mr. Kambli, the pleader for the decree-holder, who was appointed one of the Panch for the adjustment of the decree, could not be compelled to give evidence without the permission of and against the will of his client, We think it clear on the evidence of the surety himself that there was no adjustment of the claim of the judgment-creditor, so that it does not really make very much difference whether Mr. Kambli was allowed to give evidence or not, but it would appear that the decision on that point of the Subordinate Judge was right.

3. The appellant then contended that the property in question cannot be sold otherwise than by instituting a suit for sale in enforcement of the mortgage under Order XXXIV, Rule 14, Civil Procedure Code. In the first place, the judgment-creditor in this case is not a mortgagee who has obtained a decree for the payment of money in satisfaction of a claim arising under a mortgage, so that the provisions of Order XXXIV, Rule 14, are not applicable.

4. In Mukta Prasad v. Mahadeo Prasad I.L.R(1961) All. 327 a similar case, it was held that:-

Default having been made by the judgment-debtor, the decree holder was at liberty to enforce the security in the manner provided for by Section 145 of the Code of Civil Procedure, and that Order XXXIV, Rule 14, was no bar to his enforcing it against the hypothecated property as well as any other property of the surety.

5. Mr. Justice Piggott said at p. 332 :-

It may be that the decree-holder would have been entitled to bring a separate suit for the enforcement of the hypothecation contained in the security bond, and would have been in a stronger position if he had done so. I do not decide this point one way or the other. It seems to me, however, bhat the liability which it is sought to enforce by the present application for execution is a personal liability and nothing else. There is, I repeat no decree in existence for the sale of this property, and it can only be attached and brought be sale, under the terms of the simple money decree now under execution, by reason of the liability incurred by the surety and under the provisions of Section 145 of the Code of Civil Procedure. I call this enforcing the surety's liability to the extent to which he has rendered himself personally liable and be no greater extent. It seems to me, therefore, that there is no force in the suggestion that there has been any material change in the law with regard to the particular point in controversy between the Allahabad and the Calcutta High Courts. The question is whether the provisions of Order XXXIV Rule 14 prevent these particular properties from being taken in execution at all. To this question my answer would be that the said rule only applies when the mortgagee has obtained a decree for payment of money in satisfaction of a claim arising under the mortgage. In the present case the appellant has not obtained a decree against Mahadeo Prasad at all. He has obtained a decree against other persons, and Mahadeo Prasad has become liable to have his property seized in satisfaction of the decree by reason of a special covenant entered into by him, which covenant, under the provisions of Section 145 of the Code of Civil Procedure, can be enforced in the execution department without any decree being obtained against Mahadeo Prasad at all. It there-fore seams to ma that the provisions of Order XXXIV. Rule 14, have no application and cannot be put forward as a bar to the present proceedings.

6. That judgment was considered and distinguished in Amir v. Mahadeo Prasad I.L.R. (1916) All. 225 . In that case the surety besides making himself personally responsible for the amount of the decree in question, by way of further security hypothecated certain property. But, before the decree-holder sought to execute his decree, the surety had sold his equity of redemption. The purchasers of the equity of redemption objected to the sale of the property by the decree-holder on the ground that they were purchasers of all the interests of the surety, and it was held that the fact that the surety had sold his equity of redemption made it impossible for the decree-holder to execute against the property without filing a suit to obtain an enforcement of the hypothecation of the property in the surety bond.

7. Dealing with Section 145 of the Civil Procedure Code, Mr. Mulla in his notes at p. 318 (7th Edn.) says :-

The point is that where a 'surety, besides giving his personal undertaking mortgages his property for the due performance of the decree, the decree-holder is not entitled to bring the property to sale under this section as mortgaged property. There is nothing, however, to preclude the decree-holder from giving up the mortgage and attaching and selling the property under this section as if it was not mortgaged at all.

8. If, therefore, the surety has not disposed of the equity of redemption, the position is this, that the decree-holder, if he wishes to rely upon the mortgage contained in the surety bond, must get a decree upon the mortgage before he can realize his security. But he is not obliged to rely upon the security given him by the hypothecation of the property under the bond. He can rely upon the personal liability of the surety and seek to attach the property on account of that personal liability, Thereby he only releases his own interest in the mortgage, and runs the risk of other claims being made against the property either by persons entitled to later charges on it, or by other attaching creditors. However, that is a matter which the present respondent must consider for himself, At present we say that the order made by the Judge for sale of the property in question was right, and the appeal must be dismissed with costs.

Coyajee, J.

9. I agree.


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